The process of preparing accounts generally involves several stages. Although the specific stages may vary depending on the accounting standards and practices followed, here is a general overview of the four key stages:

• Data Collection and Recording: Obtaining financial information from several sources, including bank statements, invoices, receipts, and other financial papers, is the first step in the process. After that, in order to guarantee accuracy and conformity to accounting standards, accountants methodically record these transactions in the accounting system. Sorting transactions into various accounts, including as assets, liabilities, income, and expenses, is part of this process.
• Adjustments and Accruals: Secondly, accountants make the necessary adjustments to the transactions recorded in order to accurately reflect the company’s financial reality. These adjustments include accruals, prepayments, depreciation and any other necessary corrections. Adjustments ensure that the financial statements give a more accurate representation of the company’s financial position and performance by recording income and expenditure in the period to which they relate.
• Financial Statement Preparation: Using the adjusted trial balance, accountants create the financial statements. The main financial statements are the income statement, which presents income and expenses over a given period, the balance sheet, which presents the entity’s assets, liabilities and equity at a given point in time, and the cash flow statement, which describes the sources and uses of cash. These statements provide an overview of the company’s financial health and performance.
• Closing the Books:  The final step is to close the accounts for the financial year. This involves setting temporary accounts, such as income and expenditure accounts, to zero and transferring their balances to the retained earnings account. The closing entries provide a fresh start for the next accounting period. In addition, the closing process includes reviewing the financial statements, reconciling the accounts and ensuring that all necessary information and footnotes are included for transparency and compliance purposes.

These four stages in the preparation of the accounts ensure a systematic and accurate representation of a company’s financial activities, which facilitates decision-making, regulatory compliance and external reporting requirements.